The Statutory Accounting Principles Working Group (“SAPWG”) held a conference call on May 20, 2021. Through this post, our intention is to provide an informative snapshot of what was accomplished during the meeting, as well as help accelerate your determination of the impact the adoptions and modifications will have on your financial statements.
The SAPWG first reviewed and adopted the following non-contested positions, which are effective immediately and apply to all lines of business (Life/Fraternal, Property and Health), unless otherwise noted.
- Ref #2020-37: Separate Account Product Mix – This item does not result in statutory accounting revisions, but adoption by the SAPWG indicates the support for adoption at the Blanks Working Group (BWG) of 2021-03BWG, which would modify the Separate Account Interrogatory Questions 1.01, 1.01A, 2.5 and 4.2 in the Separate Account Blank. The purpose of the BWG proposal is to reflect increased granularity in the identification of registered indexed linked annuity (RILA) products within the Separate Account financial statements. (Separate Accounts)
- Ref #2020-38: Pension Risk Transfer Disclosure – This item does not result in statutory accounting revisions, but adoption by the SAPWG indicates the support for adoption at the Blanks Working Group (BWG) of 2021-03BWG, which would modify the Separate Account Interrogatory Questions 1.01, 1.01A, 2.5 and 4.2 in the Separate Account Blank. The purpose of the BWG proposal is to reflect increased granularity in the identification of pension risk transfer (PRT) transactions within the Separate Account financial statements. (Separate Accounts)
- Ref #2021-02: ASU 2020-08 – Premium Amortization on Callable Debt Securities – This item adopts the exposed nonsubstantive revisions to SSAP No. 26R – Bonds to reject ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs for statutory accounting.
- Ref #2021-03: SSAP No. 103R Disclosures – This item revises SSAP No. 103R – Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. The revisions incorporate additional disclosure elements and a data-capture template for certain disclosures in SSAP No. 103R. 2021-05BWG is currently exposed for Annual 2021 and if adopted, will modify the disclosure in Note 17.B to include a data-captured table which will assist regulators in their assessment of situations where an entity has transferred (or sold) assets but still retains a material participation in the transferred asset.
- Ref #2021-06EP – Editorial Updates – This item adopts editorial updates to revise the title of SSAP No. 53 – Property Casualty Contracts – Premiums to SSAP No. 53 – Property and Casualty Contracts – Premiums, to correct grammatical errors in paragraph 54 of SSAP No. 97 – Investments in Subsidiary, Controlled and Affiliated Entities, and to remove the footnote noted in the title of the SSAP Glossary and replace it as an opening paragraph with updated verbiage.
- Ref #2021-07 – ASU 2020-11, Financial Services – Insurance: Effective Date and Early Application – This item adopts the exposed nonsubstantive revisions to Appendix D – Nonapplicable GAAP Pronouncements to reject ASU 2020-11 as not applicable for statutory accounting.
- Ref #2021-08: ASU 2021-02, Franchisors – Revenue from Contracts with Customers – This item adopts the exposed nonsubstantive revisions to SSAP No. 47 – Uninsured Plans to reject ASU 2021-02 for statutory accounting.
Next, the SAPWG reviewed and adopted the following exposed items, incorporating minor edits as proposed by interested parties. The non substantive revisions were adopted immediately for all lines of business, unless otherwise noted.
- Ref #2021-01: ASU 2021-01, Reference Rate Reform – This adoption adds clarifying language to INT 20-01: ASU 2020-04 – Reference Rate Reform. The revisions to the INT will clarify that derivative contracts that are modified by changing the reference rate used for margining, discounting, or contract price alignment that is a result of reference rate reform (regardless of whether the reference rate being modified is expected to be discontinued) are afforded the temporary, optional expedient guidance provided for in ASU 2020-04.
- Ref #2021-05: Accounting for Cryptocurrencies – This item revises the nonsubstantive interpretive guidance provided by INT 21-01T – Statutory Accounting Treatment for Cryptocurrencies. The INT clarifies that directly held cryptocurrencies do not meet the definition of cash in SSAP No. 2R – Cash, Cash Equivalents, Drafts, and Short-Term Investments nor, when directly held, meet the definition of an admitted asset per SSAP No. 4 – Assets and Nonadmitted Assets.
Updates from prior meetings are available in Gain’s growing library of resources.
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